Burgers Bar Five Towns, LLC v. Burger Holdings Corp.

Summary

The Appellate Division, Second Department, reversed a judgment awarding the plaintiff damages and attorney’s fees for an alleged violation of New York’s Franchise Sales Act. The court held that the defendants raised a triable issue regarding the isolated-sales exemption and that the plaintiff failed to establish damages or a willful and material violation supporting attorney’s fees.

Holdings

1. The appeals from the intermediate orders must be dismissed because the right of direct appeal from those orders terminated upon entry of the final judgment; issues raised in those appeals are reviewable on the appeal from the judgment.
2. Although the plaintiff made a prima facie showing that the licensing agreement was a franchise and that no offering prospectus had been registered, the defendants raised a triable issue of fact concerning whether the agreement qualified for the isolated-sales exemption under General Business Law § 684(3)(c).
3. The plaintiff was not entitled to summary judgment because it failed to submit evidentiary proof that it sustained damages as a result of the alleged Franchise Sales Act violation or that the violation was willful and material, as required for an attorney's-fee award.

Questions Presented

1. Whether the licensing agreement constituted a franchise agreement under General Business Law § 681(3).
2. Whether the defendants raised a triable issue of fact regarding the isolated-sales exemption from the Franchise Sales Act's registration requirement under General Business Law § 684(3)(c).
3. Whether the plaintiff established damages caused by the alleged Franchise Sales Act violation.
4. Whether the plaintiff established that the alleged violation was willful and material so as to support an attorney's-fee award under General Business Law § 691(1).
5. Whether the appeals from the intermediate orders remained appealable after entry of the final judgment.

Disposition

reversed